Treasury 10-year yields at 4-month low as jobs trail forecast

Treasuries gained, pushing 10-year note yields to the lowest level in almost four months, as a weaker-than-expected jobs report added to speculation that growth in the world’s biggest economy is slowing.

Yields on the benchmark note were headed for their largest weekly decline since June after payrolls grew by 88,000 workers last month, the least in nine months, even as the unemployment rate declined, the Labor Department said. Yields have fallen as gauges of company hiring and U.S. services industries trailed estimates. Swaps traders have pushed back expectations for the Federal Reserve’s first interest-rate increase since 2006.

“It really puts the trajectory of the economy in question,” said William Larkin, a fixed-income money manager who helps oversee $500 million at Cabot Money Management Inc. “It makes Treasuries very attractive. It puts the Fed’s statements at an elevated level -- the next employment report is going to be highly sensitive.”

Ten-year note yields fell seven basis points, or 0.07 percentage point, to 1.69% at 2:37 p.m. New York time, according to Bloomberg Bond Trader data. They touched 1.68%, the lowest level since Dec. 12. The price of the 2% note maturing in February 2023 rose 20/32, or $6.25 per $1,000 face value, to 102 25/32.

Yield Curve

The 10-year yield traded below its 200-day moving average of 1.74% for the first time since Jan. 2 after closing below its 100-day moving average of 1.83% on April 3 for the first time since Dec. 11. Moving averages are indicators of momentum.

The yield on the 30-year bond touched 2.84%, the lowest level since Dec. 12. It traded below its 200-day moving average of 2.9% for the first time this year.

The difference between the yields on two-year and 10-year notes, called the yield curve, narrowed to 1.46 percentage points, the lowest level since Dec. 31. It dropped from a 2013 high of 1.82 percentage points reached on March 8, the date of the last payrolls report.

The 14-day relative strength index for 10-year note yields indicated rates may not fall much further. The index was at 27.8, below the level of 30 indicating a reversal of direction may be imminent.